Credit Fact Or Fiction

Information From The Credit Road Map by Patrick Ritchie

– A key aspect of your credit score is the ratio of your debts to your assets. FICTION: Credit scores do not consider our assets; our checking and savings balances are not reported to credit bureaus.  A credit report contains no knowledge of assets whatsoever.

– “Charge-off” means you do not have to worry about the debt. FICTION: Charge-off status means the original credit has written the debt off of its books.  Past due amount will most likely end up with a collection agency and the debt still owed until paid or included in a bankruptcy. (sic) In the form of a judgment.

–  Closing accounts will remove the late payments on an account. FICTION: Closing an account does not change the history of the account.  It’s better to leave an account open, especially in the case of revolving debt.

–  The best thing I can do for my credit is to payoff my credit cards and close them. FICTION: Since credit cards are such a powerful tool in boosting and maintaining high credit scores, it is imperative to keep these types of accounts open forever.  The longer they are open the more positive impact they will provide to the scores.  Assuming payments are on time and balances are under 50% of available limit.

–  A divorce decree will help me clear up negative things on my credit report. FICTION: A divorce decree can demonstrate whether you are legally liable for a particular debt, but it will not remove information pertaining to that debt from your credit report.

–  If I am denied credit this will be reported and hurt my credit. FICTION: If you are denied credit this will not be reported to the credit bureaus.  You will receive notice your application could not be granted, but there is no place on a credit report where this is recorded.

– Using a debit card is a good way to build a credit history. FICTION: Debit cards do not report to the credit bureaus.

–  Credit scoring considers age, income and occupation. FICTION: Although credit scoring is a statistical profile of potential consumer stability, age, income and occupation are not factors in credit scores.

–  You are not responsible for debts on a joint credit card if you did not sign for the purchase. FICTION: As a joint borrower on a credit card, or any account, you are responsible for the activity of the account.